“[A] fundamental requirement necessary for rescission of a contract is that the moving party has no adequate remedy at law.”
How later courts described this case
- “[A] fundamental requirement necessary for rescission of a contract is that the moving party has no adequate remedy at law.”
Written by the judges who cited it.
The opinion
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
FORT MYERS DIVISION
METROPOLITAN LIFE INSURANCE
COMPANY,
Plaintiff,
v. Case No: 2:20-cv-276-JES-MRM
FRED A. LIEBOWITZ,
Defendant.
OPINION AND ORDER
This matter came before the Court on March 2 through 4, 2022,
for a bench trial concerning two issues remaining after
consideration of cross motions for summary judgment. The Court
heard testimony from Dr. Fred Liebowitz, Jamie Frederick, John
Dieguez, William Whitney, Theresa Woods, and Ronald Graff.1 The
Court also received a number of exhibits from both sides and heard
closing arguments from counsel. Both parties also filed post-
trial memorandum and/or trial briefs. (Docs. ## 118, 119, 120.)
As required by Fed. R. Civ. P. 52, the Court makes findings of
fact and conclusions of law as set forth below.
I.
1 The testimony of Woods and Graff were submitted through
deposition designations by the parties. (Pl. Ex. 131; Def. Ex.
48.) At the bench trial, Plaintiff objected to the admission of
Graff’s deposition testimony on relevance grounds. Plaintiff’s
objection is overruled.
In its Complaint, plaintiff Metropolitan Life Insurance
Company (MetLife) seeks court-ordered recission of defendant Dr.
Fred Liebowitz’s (Dr. Liebowitz) disability insurance policy (the
Policy). Specifically, MetLife seeks a Court order “rescinding
the Policy, and declaring that Liebowitz has no right, title, or
interest in the Policy.” (Doc. #1, Prayer for Relief.) In his
Third Amended Counterclaim, Dr. Liebowitz asserts two
interconnected counterclaims seeking reinstatement of the Policy
and payment of benefits under the Policy. (Doc. #58.)
Discovery and trial in this matter were bifurcated. The first
(current) phase will determine the insurance coverage issue, i.e.,
whether there is an enforceable Policy between Dr. Liebowitz and
MetLife or whether MetLife can properly rescind the Policy. If
coverage is established, the second phase is intended to address
what, if any, benefits are due to Dr. Liebowitz under the Policy.
In a prior Opinion and Order (Doc. #103) resolving cross-
motions for summary judgment, the Court denied Dr. Liebowitz’s
motion for summary judgment in its entirety. As to MetLife’s
motion, the Court granted partial summary judgment in favor of
MetLife on the first, second, and fourth components of the fraud
elements of MetLife’s rescission claim. The Court also granted
partial summary judgment in favor of MetLife on Dr. Liebowitz’s
First, Fourth, Fifth, Sixth, Seventh, and Eighth Affirmative
Defenses. Additionally, pursuant to Fed. R. Civ. P. 56(g), the
Court found that the following material facts were not genuinely
in dispute and treated them as established for the coverage
determination in this case:
1. Dr. Liebowitz made false statements
concerning material facts when answering
Questions 5(i) and 17 in the Application.
2. Dr. Liebowitz knew the representations he
made when answering Questions 5(i) and 17 in
the Application were false.
3. MetLife was consequently injured when
acting in reliance of Dr. Liebowitz’s
misrepresentations.
4. The Policy includes the provision set forth
in Fla. Stat.§ 627.607(1).
5. Dr. Liebowitz was not assisted by a MetLife
insurance agent when filling out the
Application.
6. MetLife put Dr. Liebowitz on notice of its
intent to rescind the Policy based on Dr.
Liebowitz’s alleged fraud.
7. MetLife relied on the statements made by
Dr. Liebowitz in his Application in 2015 and
did not investigate his answers until after
Dr. Liebowitz filed his claim.
(Doc. #103, p. 33.)
The two primary remaining issues to be resolved in the bench
trial are whether MetLife established by a preponderance of the
evidence that: (1) Dr. Liebowitz made the false statements on the
insurance application with fraudulent intent, and (2) MetLife
rescinded the Policy within a reasonable period of time. The Court
finds, for the reasons set forth below, that Dr. Liebowitz did
have such fraudulent intent and that MetLife did rescind the Policy
within a reasonable period of time.
II.
Much of the evidence presented at trial was repetitious of
the evidence presented in connection with the summary judgment
motions. The parties previously submitted a “Statement of
Undisputed Issues of Fact” in the Joint Pretrial Statement (Doc.
#97, pp. 6-11). It continues to be the case that “[b]oth parties
contend that the facts are essentially undisputed . . .” (Doc.
#97, p. 11), although the conclusions they draw from the facts
vary greatly. The Court finds the following facts have been proven
by at least a preponderance of the evidence:
A. DOH Investigations and Complaints
For approximately 30 years Dr. Liebowitz has been a pain
management physician, and at all relevant times ran a pain
management clinic in the Fort Myers, Florida area. (Doc. #97, ¶
9(1)). Dr. Liebowitz’s primary source of income was treating
patients for pain and prescribing narcotics. (Id. ¶ 9(3).) Dr.
Liebowitz is not board certified.
By a personally delivered letter dated May 10, 2010, the
Florida Department of Health (DOH) notified Dr. Liebowitz that it
was conducting a confidential investigation of a complaint filed
against him in connection with the medical care he provided to
different patients. (Id. ¶ 9(10); Pl. Ex. 12.) Dr. Liebowitz
notified his malpractice insurance carrier of the DOH
investigation, and his carrier hired attorney William Whitney (Mr.
Whitney) to represent Dr. Liebowitz. (Doc. #97, ¶ 9(12).) Around
this same time, the DOH initiated two additional investigations
against Dr. Liebowitz, relating to his care of approximately
thirteen patients. (See Pl. Ex. 98D (describing cases).)
The DOH proceeded with the three confidential investigations
until early 2013. Dr. Liebowitz testified that, from his point of
view, the three investigations appeared largely dormant during
these years, which he attributed to weakness of the cases.
Starting in January 2013,2 after a panel of the DOH found
probable cause, the DOH filed and served Dr. Liebowitz with three
separate Administrative Complaints (the “DOH Complaints”) alleging
substandard medical care was provided to certain patients. (Doc.
#97 ¶ 9(11); Pl Ex. 27.) The DOH Complaints alleged that on many
occasions Dr. Liebowitz improperly prescribed pain killers to
patients, including one incident where a patient subsequently died
from drug overdose. The DOH Complaints requested that the Board
2 The Court’s Opinion and Order granting partial summary
judgment (Doc. #103) stated “in 2010 and 2011” the Administrative
Complaints were filed. As pointed out during the bench trial,
this was incorrect. Dr. Liebowitz was served with confidential
notices from the DOH that they were investigating his license in
2010 and 2011. (Pl. Ex. 12.) The official Administrative
Complaints were filed and became available in public record in
2013 and 2014. This correction is not material to the Court’s
summary judgment Opinion and Order.
of Medicine impose penalties on Dr. Liebowitz, including
revocation or suspension of his medical license, restrictions on
his medical practice, fines, reprimands, probation, corrective
action, and remedial education. On February 14, 2013, Dr.
Liebowitz signed an Election of Rights form disputing the facts in
the DOH Complaints and requesting a formal hearing. (Def. Ex.
39.) Dr. Liebowitz testified at trial, and has always maintained,
that he did nothing improper and that the DOH would not be able to
prove otherwise. Dr. Liebowitz testified that, based on the advice
of counsel, he believed that nothing in the DOH allegations was of
sufficient severity to warrant the loss of his medical license.
Throughout the DOH proceedings, from the confidential
complaints to the DOH Complaints, Mr. Whitney kept Dr. Liebowitz
apprised of significant developments. (Doc. #97, ¶ 9(13).) Dr.
Liebowitz testified that he worked hard to defend himself against
the DOH’s allegations with counsel, painstakingly reviewing
medical records and expert opinions, because he felt he had done
nothing wrong. Dr. Liebowitz stayed current on matters related to
the DOH Complaints because the proceedings were important to his
medical practice and reputation. Dr. Liebowitz testified that
both he and Mr. Whitney felt Dr. Liebowitz would be successful in
his defense.
In July 2014, the DOH provided Dr. Liebowitz with a proposed
settlement (the 2014 Settlement Agreement) (Pl. Ex. 35) for the
three pending DOH Complaints. Dr. Liebowitz and Mr. Whitney
discussed the proposal in detail. Around this same time, Dr.
Liebowitz was sent another notice from the DOH concerning a fourth,
still-confidential investigation into his medical care of
patients.3 In September 2014, Dr. Liebowitz hired a second
attorney (Allan Grossman4) with his own funds to provide another
review of his cases and to evaluate the 2014 Settlement Agreement.
(Pl. Ex. 98D.)
The proposed 2014 Settlement Agreement contemplated
resolution of Dr. Liebowitz’s three pending DOH Complaints and did
not consider the fourth investigation. The 2014 Settlement
Agreement included a reprimand against Dr. Liebowitz’s medical
license; a “death penalty” provision for Dr. Liebowitz’s
specialized practice, which, if accepted, would have prohibited
Dr. Liebowitz from prescribing controlled substances; the
imposition of a fine and costs; and other non-economic conditions.
Dr. Liebowitz testified he never took this proposal seriously, and
never accepted it.
Dr. Liebowitz did, however, on advice of counsel, take steps
in late 2014 to enhance his settlement negotiation position. Dr.
3 This would ultimately become an official, public DOH
Complaint in late 2015.
4 Mr. Grossman is the former general counsel of the Florida
Board of Medicine.
Liebowitz: (1) hired a risk management consultant to evaluate his
medical practice (Pl. Ex. 98E); (2) took various continuing medical
education courses related to his specialty; and (3) went to
Colorado for a physician’s assessment (Pl. Ex. 98F). Dr. Liebowitz
paid for these services out-of-pocket.
B. MetLife Insurance Application and Policy Issuance
For the prior 10-15 years, Dr. Liebowitz’s regular insurance
agent was Mark Vertich (Mr. Vertich), an independent insurance
broker. Sometime in mid- to late-2014, Dr. Liebowitz spoke with
Mr. Vertich about obtaining disability insurance. Dr. Liebowitz
testified that, several years before speaking with Mr. Vertich
about disability insurance, he had a disability policy with another
insurer for 10-15 years but had let the policy lapse for several
years before seeking the MetLife policy. Dr. Liebowitz decided
that, considering his current family situation, he had made a
mistake in letting the policy lapse. It is unclear why Dr.
Liebowitz or Mr. Vertich chose to pursue a MetLife policy, since
at the time Mr. Vertich was not an authorized broker for MetLife.
In any event, on January 30, 2015, Dr. Liebowitz and Mr.
Vertich sat at a kitchen table at Dr. Liebowitz’s office to fill
out MetLife’s 11-page application (the “Application”) (Pl. Ex. 3)
and 2-page Health Questionnaire Supplement (Pl. Ex. 6) for
disability insurance. Mr. Vertich read Dr. Liebowitz the questions
on the Application and Supplement, Dr. Liebowitz dictated his
responses to Mr. Vertich, Mr. Vertich transcribed the information,
and Dr. Liebowitz signed the document. There were no instructions
provided with the Application and Mr. Vertich did not provide any
instruction to Dr. Liebowitz. Dr. Liebowitz assumed MetLife wanted
an applicant to be truthful and honest and to fill out everything
to the best of their knowledge. Indeed, the Application provides
that all answers are “to the best of [his] knowledge and belief.”
(Pl. Ex. 3, p. 6.) Dr. Liebowitz testified that the information
in the Application was transcribed correctly by Mr. Vertich. The
total process to complete the Application took 10-15 minutes.
The Application included the following two relevant questions
and answers:
Question 5(i): Are you aware of any fact that
could change your occupational status or
financial stability? If YES, please give
details below.
Answer: No [box checked].
***
Question 17: Have you EVER had a professional
license suspended, revoked, or is such license
under review or have you ever been disbarred?
If YES, give details below.
Answer: No [box checked].
(Id. pp. 1, 5.) Dr. Liebowitz maintains to this day that these
answers were truthful. Prior to issuing the Policy, MetLife made
no investigation to determine the accuracy of Dr. Liebowitz’s
answers to the two questions in the Application, relying solely on
his answers. (Doc. #97, ¶ 9(8).)
MetLife processed Dr. Liebowitz’s Application and issued the
Policy between April 16 and May 3, 2015. (Doc. #97, ¶ 9(4); Pl.
Ex. 1.) The Policy was backdated to March 6, 2015 to preserve Dr.
Liebowitz’s age (54 years old at the time of his Application).
(Pl. Ex. 1, p. 3.) Between May 3 and 4, 2015, the Policy was
delivered to Dr. Liebowitz, who signed an Amendment to the
Application which affirmed that “there [were] no facts or
circumstances which would require a change in the answers in the
application” and that “[t]o the best of my knowledge and belief,
the statements and answers in the application as amended by this
form are true and complete as of the date this form is signed.”
(Pl. Ex. 9.)
The Policy itself is an occupational disability insurance
policy. (Pl. Ex. 1.) MetLife issues this type of insurance policy
to high-wage earners, such as lawyers and doctors, like Dr.
Liebowitz. Occupational disability insurance policies are
designed to protect a wage-earner’s income should the insured be
unable to work because of a disability. The Policy provides for
both total disability and residual disability benefits. (Id. p.
3.) If Dr. Liebowitz was ever found to be totally disabled under
the Policy, he would receive $16,550 per month in benefits.
C. Resolution of the DOH Complaints
Returning to Dr. Liebowitz’s DOH proceedings, the intensity
of the proceedings seemed to ebb and flow over the years, sometimes
with greater interest and activity than at other times. By March
2016, although Dr. Liebowitz continued to maintain his innocence,
Dr. Liebowitz advised Mr. Whitney of his willingness to negotiate
a settlement. (Pl. Ex. 99.) However, there is nothing to indicate
Dr. Liebowitz and the DOH talked settlement in 2016 and Mr. Whitney
testified that the proposed 2014 Settlement Agreement remained on
the table. By 2017 Dr. Liebowitz felt that a perceived opioid
epidemic caused the narcotics prescription practices of physicians
to receive closer scrutiny. But the DOH proceedings remained
relatively quiet. Finally, in December 2017 the Sun-Sentinel
described Dr. Liebowitz’s DOH Complaints in an on-line article
titled “Dangerous doctors, Pain pill docs keep prescribing despite
state charges.” (Pl. Ex. 40.) This publication and other
pressures about the length of Dr. Liebowitz’s DOH proceedings
appeared to create renewed interest in the DOH prosecuting Dr.
Liebowitz’s cases.
By 2018, the DOH amended the DOH Complaints, reduced the
scope of the allegations (Pl. Ex. 115B) to 16 counts, and told Mr.
Whitney they were willing to administratively try those counts.
As this new prosecution progressed, Mr. Whitney’s evaluation of
the cases began to change, recognizing that it would be difficult
for Dr. Liebowitz to be successful on all 16 counts. (Pl. Ex.
45.) Dr. Liebowitz became focused on the three-strike rule, under
which his medical license could be threatened if the administrative
judge found three violations of the standard of care. Also, Dr.
Liebowitz’s defense funds available through his malpractice
insurer were beginning to run low, and the anticipated costs of
defending himself were significant. By August 2018 these
circumstances caused Dr. Liebowitz and his attorney to engage in
extensive discussions regarding settlement. (Id.)
On September 11, 2018, pursuant to the advice of counsel, Dr.
Liebowitz entered into a settlement agreement (the 2018 Settlement
Agreement) with the DOH. (Doc. #97, ¶ 9(15); Pl. Ex. 60.) The
Board of Medicine approved the 2018 Settlement Agreement at a
hearing on December 7, 2018 and issued a Final Order approving the
2018 Settlement Agreement on December 18, 2018. The Clerk of the
Department of Health docketed the Final Order on December 20, 2018.
(Pl. Ex. 60.) Among other things, the Final Order issued a
reprimand against Dr. Liebowitz’s medical license, restricted his
DEA license and his ability to prescribe any controlled substance
until he complied with certain requirements, imposed a fine and
costs, and imposed other non-economic conditions. (Id.) Despite
the settlement, Dr. Liebowitz testified at trial that to this day
he feels he did everything properly and within the required
standard of care.
D. Dr. Liebowitz’s Insurance Claim
In September 2018, when Dr. Liebowitz was filling out the
health section of a life insurance policy application with Mr.
Vertich, he discussed difficulties with his left ankle arising
from October-November 2014.5 Mr. Vertich reminded Dr. Liebowitz
of his Policy with MetLife, but Dr. Liebowitz did not perceive
himself as disabled at the time and was uncertain whether he wanted
to file a claim. Nonetheless, on September 17, 2018, Mr. Vertich
called MetLife about a disability claim to be filed by Dr.
Liebowitz. (Pl. Ex. 48.)
The next day, MetLife sent Dr. Liebowitz a letter enclosing
an initial claim form. (Pl. Ex. 49.) On October 22, 2018, Theresa
Woods,6 a MetLife claims adjuster, spoke with Mr. Vertich on the
phone about the potential claim by Dr. Liebowitz. (Pl. Ex. 54.)
On November 15, 2018, not having heard from Dr. Liebowitz or Mr.
Vertich, Ms. Woods followed-up with Dr. Liebowitz regarding his
potential claim. (Pl. Ex. 55.) On that same day, Ms. Woods placed
the Sun-Sentinel article into Dr. Liebowitz’s claim file. (Pl.
5 Dr. Liebowitz testified at trial that he began experiencing
ankle pain in late 2014. In his claim form, Dr. Liebowitz wrote
that he began experiencing ankle pain in late 2015 and his
disabling condition began in January 2016. (Pl. Ex. 61.) In his
counterclaim, Dr. Liebowitz states his disabling condition from
ankle pain began in July 2017. (Doc. #58, ¶ 38.)
6 In certain documents submitted as evidence, Theresa Woods
is seen by her maiden name, Theresa First. The Court will
consistently use Theresa Woods.
Ex. 40.) On November 29, 2018, Ms. Woods placed a DOH license
verification printout from the DOH website into the claim file.
(Pl. Ex. 57.) On December 14, 2018, after not receiving a claim
form, Ms. Woods again reached out to Dr. Liebowitz concerning his
potential claim. (Pl. Ex. 58.)
On December 18, 2018, Dr. Liebowitz submitted his initial
claim form for residual disability benefits to MetLife. (Pl. Ex.
61.) In the form, Dr. Liebowitz indicated that his disabling
condition (ankle injury) which entitled him to residual disability
benefits began on January 4, 2016. Dr. Liebowitz attached a
detailed handwritten statement to the claim form which indicated
he wanted have ankle surgery in early 2019 and secure a temporary
physician (locum tenens) to help cover his practice while he was
off his feet. (Id.) Dr. Liebowitz did not disclose in his claim
form that he also intended to hire a temporary physician to
prescribe pain medication in early 2019 because of the restrictions
on his DEA license from the 2018 Settlement Agreement. Dr.
Liebowitz testified that he hoped to get ankle surgery done in
early 20197 because he already knew he would have coverage for his
practice due to the DEA restrictions.
E. MetLife’s Claim Processing and Rescission
7 Dr. Liebowitz ultimately had successful ankle surgery in
April 2021.
Ms. Woods then began formally processing Dr. Liebowitz’s
claim. The evidence showed the following timeline:
Date Occurrence
December 18, 2018 Dr. Liebowitz submitted his initial claim
form. (Pl. Ex. 61.)
December 28, 2018 Ms. Woods printed, and included in the claim
file, two documents from Dr. Liebowitz’s DOH
public profile which showed information about
the DOH Complaints and 2018 Settlement
Agreement. (Pl. Ex. 62; Def. Ex. 20.)
January 9, 2019 Ms. Woods sent Dr. Liebowitz a status letter
that described the Policy, requested certain
financial and medical records from him, and
explained that his almost three-year delay in
filing the claim may necessitate more time to
evaluate the claim. (Def. Ex. 21.)
February 8, 2019 Ms. Woods sent Dr. Liebowitz another status
letter requesting additional information and
informing Dr. Liebowitz that a field
representative would be meeting with him.
(Def. Ex. 22.)
March 8, 2019 Ms. Woods sent a status letter to Dr.
Liebowitz. (Def. Ex. 23.)8
May 3, 2019 Ms. Woods sent a status letter to Dr.
Liebowitz. (Def. Ex. 24.)9
Late May to early Ms. Woods went on maternity leave and Jamie
June 2019 Frederick was assigned to Dr. Liebowitz’s
claim. Mr. Frederick begins to focus on the
DOH medical license issue.
8 In the various status letters, Ms. Woods described the
medical, financial, and occupational records she was collecting,
or still needed from Dr. Liebowitz, to process his claim. None of
the status letters from Ms. Woods sought information from Dr.
Liebowitz about the DOH Complaints.
9 See fn. 8.
June 7, 2019 Mr. Frederick spoke to Dr. Liebowitz on the
phone, provided a status update, and inquired
about the DOH proceedings. (Pl. Ex. 71.)
June 8, 2019 Mr. Frederick sent a follow-up status letter
to Dr. Liebowitz and requested additional
information about the DOH Complaints. (Def.
Ex. 25.)
July 19, 2019 Mr. Frederick met with in-house counsel to
discuss the DOH Complaints and possible
impact on Dr. Liebowitz’s claim adjudication.
August 8, 2019 Mr. Frederick sent another status letter to
Dr. Liebowitz. (Def. Ex. 28.)
August 8, 2019 Mr. Frederick requested information from the
DOH about Dr. Liebowitz’s DOH proceedings
since 2014. (Pl. Ex. 73.) The DOH quickly
responded. (Pl. Ex. 74.)
Early August 2019 Mr. Frederick sent a referral to MetLife’s
underwriting department to determine whether
there were issues with the Application based
on the information in MetLife’s possession.
August 20, 2019 Linda Castonguay executed a Referral to
Underwriter, which described the possible
material misrepresentations in the
Application. (Pl. Ex. 77.) Ms. Castonguay
pointed out issues with Dr. Liebowitz’s
medical disclosures. (Id.) Ms. Castonguay
also stated that, had MetLife known of the
DOH Complaints and medical licensing issues,
MetLife would not have issued the Policy.
(Id.) Ms. Castonguay only mentioned Question
17, not Question 5(i), in support of her
finding.
October 10, 2019 Without any response from Dr. Liebowitz to
the June 8th or August 8th letters, Mr.
Frederick sent Dr. Liebowitz a letter (Def.
Ex. 29) describing MetLife’s concern with
answers to Application Questions 5(i) and 17
because Dr. Liebowitz did not disclose the
DOH proceedings and requested an explanation
for the failure to disclose. (Id.)
October 24, 2019 Dr. Liebowitz responded, through counsel, and
asserted his belief that he did not need to
disclose the DOH proceedings on the
Application because:
1. It was his understanding and belief
and remains the same that [he] did
not [sic] believe in good faith
that any proceedings would have
changed his occupational status or
financial stability and, in fact,
the administrative proceeding
ended without any admission of
wrongdoing on Dr. Liebowitz’s part
whatsoever; and
2. His license was neither suspended
nor revoked nor was he ever
“disbarred” as a result of any
proceeding.
(Pl. Ex. 79.)
October 29, 2019 Mr. Frederick requested additional
information from counsel about the possible
medical misrepresentations in the
Application. (Pl. Ex. 79A.)
December 2, 2019 After receiving an extension of time (Pl.
Exs. 79B, 79C, 80), Dr. Liebowitz’s counsel
responded (Pl. Ex 79D).
December 3, 2019 Mr. Frederick sent Dr. Liebowitz’s counsel a
letter, confirming receipt of his prior
correspondence and stating that MetLife was
reviewing all information. (Pl. Ex. 79E.)
December 18, 2019 Interested MetLife personnel met to discuss
Dr. Liebowitz’s file and Application.
MetLife ultimately decided to rescind the
Policy. (Pl. Ex. 81.)
December 30, 2019 MetLife sent Dr. Liebowitz, through counsel,
a formal Notice of Rescission, which included
a check representing all premiums paid plus
interest. (Pl. Exs. 82, 83.)
III.
Generally, to succeed on a claim for rescission a plaintiff
must prove the following six elements by a preponderance of the
evidence:
(1) [t]he character or relationship of the
parties; (2) [t]he making of the contract; (3)
[t]he existence of fraud, mutual mistake,
false representations, impossibility of
performance, or other ground for rescission or
cancellation; (4) [t]hat the party seeking
rescission has rescinded the contract and
notified the other party to the contract of
such rescission; (5) [i]f the moving party has
received benefits from the contract, he should
further allege an offer to restore these
benefits to the party furnishing them, if
restoration is possible; [and] (6) [l]astly,
that the moving party has no adequate remedy
at law.
Billian v. Mobil Corp., 710 So.2d 984, 991 (Fla. 4th DCA 1998).
A. Undisputed Elements of Rescission Claim
The existence of four of the six elements is not disputed by
the parties. The “first requirement of a suit for rescission under
Florida law” is that the “parties to the lawsuit lie in contractual
privity.” Thompkins v. Lil’ Joe Records, Inc., 476 F.3d 1294,
1315 (11th Cir. 2007) (citation omitted). The second element of
a rescission claim requires proof that a contract was made between
the parties. Billian, 710 So.2d at 991. It is undisputed that
there was a contract (i.e., the insurance Policy) between MetLife
and Dr. Liebowitz. The Court concludes that MetLife has
established the first and second elements of its rescission claim.
The fifth element of a rescission claim requires MetLife to
prove that it offered to restore any benefits received from Dr.
Liebowitz under the Policy. Billian, 710 So.2d at 991. On
December 30, 2019, MetLife sent Dr. Liebowitz a check representing
all premiums previously paid on the Policy plus interest. (Pl.
Exs. 82, 83.) The Court concludes that MetLife has established
the fifth element of its rescission claim.
The sixth element of a rescission claim requires MetLife to
show that there are no adequate remedies at law. Billian, 710
So.2d at 991. See also Rost Invs., LLC v. Cameron, 302 So. 3d
445, 450 (Fla. 2d DCA App. 2020), review denied, No. SC20-1495,
2021 WL 1402224 (Fla. Apr. 14, 2021) (“Rescission is an equitable
remedy which is only available if the [plaintiffs] have no remedy
at law.” ); Collier v. Boney, 525 So. 2d 971, 972 (Fla. 1st DCA
1988) (“[A] fundamental requirement necessary for rescission of a
contract is that the moving party has no adequate remedy at law.”).
MetLife has no legal remedy, and its only remedy to preclude Dr.
Liebowitz from seeking benefits under the Policy is to rescind the
Policy. The Court concludes that MetLife has established the sixth
element of its rescission claim.
B. Disputed Elements of Rescission Claim
The third and fourth elements of the rescission claim are
strenuously contested by the parties and were the two remaining
issues after the Court’s Order on summary judgment: (1) MetLife’s
grounds for rescission, i.e., Dr. Liebowitz’s intent; and (2)
MetLife’s actual rescission, i.e., whether MetLife rescinded the
policy within a reasonable time period. The Court addresses each
in turn.
(1) Misrepresentations on Insurance Application
The third element of a recission claim requires a plaintiff
to establish a ground for recession, such as the existence of fraud
or false representations. Billian, 710 So.2d at 991. In the
context of the rescission of an insurance policy, “Florida law ...
gives an insurer the unilateral right to rescind its insurance
policy on the basis of misrepresentation in the application of
insurance.” Moustafa v. Omega Ins. Co., 201 So. 3d 710, 714 (Fla.
4th DCA 2016) (citation omitted).
Rescission of an insurance policy because of a misstatement
in the application is governed by Fla. Stat. § 627.409(1), which
provides in relevant part:
(1) Any statement or description made by or on
behalf of an insured or annuitant in an
application for an insurance policy or annuity
contract, or in negotiations for a policy or
contract, is a representation and not a
warranty. Except as provided in subsection
(3), a misrepresentation, omission,
concealment of fact, or incorrect statement
may prevent recovery under the contract or
policy only if any of the following apply:
(a) The misrepresentation, omission,
concealment, or statement is fraudulent or is
material to the acceptance of the risk or to
the hazard assumed by the insurer.
(b) If the true facts had been known to the
insurer pursuant to a policy requirement or
other requirement, the insurer in good faith
would not have issued the policy or contract,
would not have issued it at the same premium
rate, would not have issued a policy or
contract in as large an amount, or would not
have provided coverage with respect to the
hazard resulting in the loss.
Under this statute, “misrepresentations, omissions, concealment of
facts, and incorrect statements on an insurance application will
not prevent a recovery under the policy unless they are either:
(1) fraudulent; (2) material to the risk being assumed; or (3) the
insurer in good faith either would not have issued the policy or
would have done so only on different terms had the insurer known
the true facts.” Certain Underwriters at Lloyd’s London v.
Jimenez, 197 So. 3d 597, 601 (Fla. 3d DCA 2016). Even an
unintentional misstatement can constitute grounds for rescission
under the statute if the other statutory elements are satisfied.
Hauser v. Life Gen. Sec. Ins. Co., 56 F.3d 1330, 1334 (11th Cir.
1995), as amended on denial of reh’g (Sept. 15, 1995).
In this case, however, the statutory basis for rescission is
further restricted by two provisions in the Policy. First, the
Policy contains a “Time Limit on Certain Defenses” provision, which
provides: “After 2 years from the issue date, only fraudulent
misstatements in the application may be used to void the policy or
deny any claim for loss incurred or disability starting after the
2-year period.” (Doc. #103, p. 27.)10 Because of the “Time Limit
on Certain Defenses” provision, MetLife may only rescind the Policy
based on fraudulent misstatements. Fla. Stat. § 627.409(1)(a); §
627.607(1). Under Florida law, “there are four elements of
fraudulent misrepresentation: (1) a false statement concerning a
material fact; (2) the representor’s knowledge that the
representation is false; (3) an intention that the representation
induce another to act on it; and (4) consequent injury by the party
acting in reliance on the representation.” Butler v. Yusem, 44
So. 3d 102, 105 (Fla. 2010) (quotation omitted). Following the
Court’s Order on summary judgment, only the third element remains.
(Doc. #103.)
Second, the language used in the Application required Dr.
Liebowitz to affirm that his statements were true “to the best of
his knowledge and belief.” “Where the language an insurance
company chooses in its insurance application shifts the focus from
a determination of truth or falsity of an applicant’s statements
10 The original Policy language did not strictly conform with
Fla. Stat. § 627.607(1). (See Pl. Ex. 1, p. 15.) As detailed in
the Court’s summary judgment order, the Court deemed the Policy to
include the two-year provision of Fla. Stat. § 627.607(1). (Doc.
#103, pp. 24-27.)
to an inquiry into whether the applicant believed the statements
to be true, the applicant’s answers must be assessed in light of
his actual knowledge or belief.” Hauser, 56 F.3d at 1334–35. The
Eleventh Circuit has approved the following test for examining
responses to questions asked according to the applicant’s
knowledge and belief:
The twin qualifiers knowledge and belief]
require that knowledge not defy belief. What
the applicant in fact believed to be true is
the determining factor in judging the truth or
falsity of his answer, but only so far as that
belief is not clearly contradicted by the
factual knowledge on which it is based. In any
event, a court may properly find a statement
false as a matter of law, however sincerely it
may be believed. To conclude otherwise would
be to place insurance companies at the mercy
of those capable of the most invincible self-
deception—persons who having witnessed the
Apollo landing still believe the moon is made
of cheese.
Hauser, 56 F.3d at 1335 (cleaned up); see also Miguel v. Metro.
Life Ins. Co., 200 Fed. App’x. 961, 966 (11th Cir. 2006) (citations
omitted).
So, considering the foregoing law, the Court asks two
questions: (1) Did Dr. Liebowitz intend that MetLife rely on his
false statements in the Application? And, (2) Did Dr. Liebowitz
fail to fill out the Application “to the best of his knowledge and
belief?” Because the Court answers both questions “yes,” the Court
finds that MetLife had grounds to rescind the Policy.
For the first question, the Court already found, and continues
to find, that Dr. Liebowitz knowingly made false statements in the
Application. (Doc. #103, p. 16.) Dr. Liebowitz filled out the
Application with the intent to receive disability insurance
coverage from MetLife. An insurer, like MetLife, is entitled to
rely on the statements in the Application. Nembhard v. Universal
Prop. & Cas. Ins. Co., No. 3D20-1383, 2021 WL 3640525, at *3 (Fla.
3d DCA Aug. 18, 2021) (citations omitted) (“An insurance company
has the right to rely on an applicant’s representations in an
application for insurance and is under no duty to inquire further,
unless it has actual or constructive knowledge that such
representations are incorrect or untrue.”). By seeking the
insurance policy and knowingly making false statements on the
Application, Dr. Liebowitz intended for MetLife to rely on his
false statements to obtain the Policy from MetLife. See Philip
Morris USA Inc. v. Principe, 3D20-875, 2021 WL 4302370, at *6 (Fla.
3d DCA Sept. 22, 2021) (citation omitted) (““A false statement in
the abstract, even if knowingly made, does not constitute fraud;
indeed, what makes a false statement fraudulent is the declarant’s
intent that others rely upon it.”). The Court finds that MetLife
has proven that Dr. Liebowitz acted with fraudulent intent when he
completed the Application.
For the second question, despite Dr. Liebowitz’s stated
belief that he answered Questions 5(i) and 17 on the Application
correctly, the circumstantial evidence establishes the contrary.
In 2014, Dr. Liebowitz sought out the MetLife policy with Mr.
Vertich’s assistance, having let a prior disability insurance
policy lapse for several years. Despite the lack of instructions
with the application form, Dr. Liebowitz testified that he
understood the key relevant requirement – that he answer the
questions honestly to the best of his knowledge and belief. Dr.
Liebowitz clearly knew the two questions at issue were relevant
and material, since he was applying for an occupational disability
policy. In January 2015, when Dr. Liebowitz filled out the
Application with Mr. Vertich’s assistance, Dr. Liebowitz’s DOH
proceedings were active: (1) the 2014 Settlement Agreement was
pending and included a serious “death penalty” provision; (2) two
attorneys (one being paid out-of-pocket) were reviewing his cases
and the 2014 Settlement Agreement; and (3) Dr. Liebowitz was taking
active (and expensive) steps to try and improve his negotiation
position with the DOH, including flying to Colorado for a
physician’s assessment in late December 2014. Dr. Liebowitz’s
stated belief is clearly contradicted by his actual knowledge at
the time he filled out the Application.
At trial, Dr. Liebowitz tried to explain his reasoning behind
this belief in part because he did not think he needed to disclose
the DOH proceedings since he was applying for disability insurance
and the DOH proceedings were separate issues. In Dr. Liebowitz’s
view, the Policy only concerned coverage if he became disabled due
to health issues or an accident, and the Policy had nothing to do
with his job or losing his license. The Court does not find Dr.
Liebowitz’s explanation accurate or credible. Dr. Liebowitz was
applying for an occupational disability insurance policy, which
would provide him at most $16,550 per month if he were unable to
work because of a total disability. Dr. Liebowitz’s occupational
information was important to him receiving coverage from MetLife,
including the amount of coverage from MetLife. That is why MetLife
asked him questions about his “occupational status” and
professional license. Dr. Liebowitz did not fill out the
Application “to the best of his knowledge and belief.” Had he
done so, he would have disclosed the DOH proceedings.
Similarly, the Court does not find Dr. Liebowitz’s other
explanations for why he believed he was not required to disclose
the DOH proceedings to be credible in light of the factual events
which were well known to him. While the case is not as tenuous as
the moon-made-out-of-cheese example in Hauser, 56 F.3d at 1335,
Dr. Liebowitz’s stubborn refusal to acknowledge the fact of an
ongoing investigation which could jeopardize his medical license
and his financial stability cannot justify his answers. The Court
finds that when Dr. Liebowitz answered “no” to the two questions,
he did not answer either to the “best of his knowledge and belief.”
Indeed, that Court is satisfied that Dr. Liebowitz did in fact
believe that the DOH proceedings were a review of his medical
license, that he could lose his medical license either temporarily
or permanently, and either such loss would have serious financial
repercussions.
Thus, the Court finds that MetLife has carried its burden of
proving intent by a preponderance of the evidence and that MetLife
has proven all elements of fraudulent misrepresentation. The Court
also finds that Dr. Liebowitz did not fill out the Application to
the best of his knowledge or belief. The Court concludes that
MetLife has establish that it had grounds to rescind the Policy,
the third element of its rescission claim.
Additionally, because MetLife established intent, MetLife is
entitled to judgment on the Second and Third Affirmative Defenses,
the only two defenses which remained following the Court’s Order
on summary judgment (Doc. #103), to the extent those defenses
asserted that MetLife could not rescind the Policy based on Dr.
Liebowitz’s intent.
(2) Rescission and Notice of Rescission
The fourth element of a rescission claim requires MetLife to
prove that it rescinded the Policy and notified Dr. Liebowitz of
the rescission within a reasonable period of time. Billian, 710
So.2d at 991. “An insurer that delays informing its insureds of
a dispute about coverage may find itself estopped from contesting
coverage if the insureds show prejudice resulting from the delay.”
Nat'l Union Fire Ins. Co. of Pittsburgh, Pa. v. Sahlen, 999 F.2d
1532, 1537 (11th Cir. 1993).
[W]hen an insurer has knowledge of the
existence of facts justifying a forfeiture of
the policy, any unequivocal act which
recognizes the continued existence of the
policy or which is wholly inconsistent with a
forfeiture, will constitute a waiver thereof.
While, ordinarily, the insurer is not deemed
to have waived its rights unless it is shown
that it has acted with the full knowledge of
the facts, the intention to waive such rights
may be inferred from a deliberate disregard of
information sufficient to excite attention and
call for inquiry as to the existence of facts
by reason of which a forfeiture could be
declared.
Johnson v. Life Ins. Co. of Ga., 52 So. 2d 813, 815 (Fla. 1951).
An insurer, however, may take a reasonable amount of time to
investigate the facts justifying rescission. “An insurer is not
deemed to have waived its right to contest the validity of an
insurance policy by the acceptance of a premium unless it is shown
that it has acted with full knowledge of the facts. Likewise,
estoppel can only be invoked against an insurer when its conduct
has been such as to induce action in reliance upon it.” Mut. of
Omaha Ins. Co. v. Eakins, 337 So. 2d 418, 419 (Fla. 2d DCA
1976)(citations omitted.)
The timeline from the start of MetLife’s claim processing to
the final decision to rescind the Policy demonstrates that MetLife
took reasonable time to investigate Dr. Liebowitz’s disability
claim and his Application before seeking rescission. On December
28, 2018, shortly after receiving Dr. Liebowitz’s claim form, Ms.
Woods printed off information about the DOH Complaints and the
restriction on Dr. Liebowitz’s medical license. The evidence does
not show that Ms. Woods deliberately disregarded this information,
but was focused elsewhere. Ms. Woods was actively trying to gather
a plethora of information about Dr. Liebowitz’s residual
disability claim which asserted that his work had been impacted
due to an ankle injury since January 4, 2016.11 Ms. Woods was not
looking for possible fraud on the Application. Ms. Woods testified
that she did not even remember the Application questions while
processing the claim.
MetLife was also not required to rely solely on the printouts
from the DOH website to determine that there may have been concerns
with the Application. Mr. Frederick, who took over Dr. Liebowitz’s
file after Ms. Woods left on maternity leave, testified that he
did not understand the information shown on the printouts or the
DOH website.12 Notably, once MetLife started actively
investigating Dr. Liebowitz’s medical license and requested more
11 Dr. Liebowitz’s now contends that his disabling condition
occurred in July 2017. However, at the time he filled out the
Application, he claimed a January 4, 2016 disabling condition.
The start of MetLife’s claim adjudication and ultimate rescission
determination was based on that date.
12 The DOH website further disclaims any accuracy of the
information provided and “strongly urges all users of this site to
conduct their own investigation of any individual.” See
https://www.floridahealth.gov/disclaimer.html.
information from him on June 7-8, 2019, Dr. Liebowitz failed to
respond until October 24, 2019. So, MetLife’s investigation was
stalled, in large part, by Dr. Liebowitz himself.
The Court finds that the time MetLife took to rescind Dr.
Liebowitz’s policy was reasonable. It is also undisputed that
MetLife sent Dr. Liebowitz notice of its rescission on December
30, 2019. The Court concludes that MetLife has established the
fourth element of its rescission claim.
IV.
The Court concludes that MetLife carried its burden and has
proven all six elements of its rescission claim by a preponderance
of the evidence. MetLife is (and was) entitled to rescind the
Policy. The Court declares that Dr. Liebowitz has no right, title,
or interest in the Policy. This resolves both MetLife’s Complaint
(Doc. #1) and Dr. Liebowitz’s Counterclaim I (Doc. #58, p. 18),
which sought reinstatement of the Policy.
Dr. Liebowitz’s Counterclaim II seeks a payment of disability
benefits under the Policy. Because the Court determines that Dr.
Liebowitz is not entitled to enforce the Policy, Dr. Liebowitz
cannot seek relief under the Policy. Counterclaim II is dismissed
with prejudice.
Accordingly, it is now
ORDERED :
1. The Court finds that MetLife has sustained its burden of
proof as to the Complaint (Doc. #1) seeking recission of
the disability insurance Policy. The Court finds that
Dr. Liebowitz has not sustained his burden on his
Counterclaim I (Doc. #58) seeking a declaration that the
Policy is reinstated.
2. MetLife is entitled to judgment in its favor on the
Complaint (Doc. #1), Counterclaim I (Doc. #58), and Dr.
Liebowitz’s First through Eighth Affirmative Defenses
(Doc. #58).
3, Counterclaim II (Doc. #58) is dismissed with prejudice.
4. The Clerk shall enter judgment accordingly and close the
case.
DONE and ORDERED at Fort Myers, Florida, this 21st day of
March, 2022.
pee
□ eh thiol
JQGHN E. STEELE
si IOR UNITED STATES DISTRICT JUDGE
Copies:
Counsel of Record